Loans / Leases AND ALLOWANCE FOR CREDIT LOSSES |
3. Loans and Leases AND ALLOWANCE FOR CREDIT LOSSES
Loans and leases for which Huntington has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified in the Consolidated Balance Sheets as loans and leases. Except for loans which are accounted for at fair value, loans and leases are carried at the principal amount outstanding, net of unamortized deferred loan origination fees and costs and net of unearned income. At December 31, 2012 and 2011, the aggregate amount of these net unamortized deferred loan origination fees and net unearned income was $174.5 million and $122.5 million, respectively.
Loan and Lease Portfolio Composition
The table below summarizes the Company's primary portfolios. For ACL purposes, these portfolios are further disaggregated into classes which are also summarized in the table below.
Portfolio |
Class |
|
|
Commercial and industrial |
Owner occupied |
|
Purchased credit-impaired |
|
Other commercial and industrial |
|
|
Commercial real estate |
Retail properties |
|
Multi family |
|
Office |
|
Industrial and warehouse |
|
Purchased credit-impaired |
|
Other commercial real estate |
|
|
Automobile |
NA (1) |
|
|
Home equity |
Secured by first-lien |
|
Secured by junior-lien |
|
|
Residential mortgage |
Residential mortgage |
|
Purchased credit-impaired |
|
|
Other consumer |
Other consumer |
|
Purchased credit-impaired |
|
|
(1) Not applicable. The automobile loan portfolio is not further segregated into classes. |
Direct Financing Leases
Huntington's loan and lease portfolio includes lease financing receivables consisting of direct financing leases on equipment, which are included in C&I loans, and on automobiles. Net investments in lease financing receivables by category at December 31, 2012 and 2011 were as follows:
|
|
|
At December 31, |
(dollar amounts in thousands) |
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
|
Commercial and industrial: |
|
|
|
|
|
|
Lease payments receivable |
|
$ |
1,477,296 |
|
$ |
1,001,939 |
Estimated residual value of leased assets |
|
|
332,369 |
|
|
201,663 |
Gross investment in commercial lease financing receivables |
|
|
1,809,665 |
|
|
1,203,602 |
Net deferred origination costs |
|
|
2,805 |
|
|
3,034 |
Unearned income |
|
|
(142,904) |
|
|
(109,820) |
Total net investment in commercial lease financing receivables |
|
$ |
1,669,566 |
|
$ |
1,096,816 |
|
|
|
|
|
|
|
Consumer - Automobile: |
|
|
|
|
|
|
Lease payments receivable |
|
$ |
(299) |
|
$ |
2,562 |
Estimated residual value of leased assets |
|
|
921 |
|
|
10,843 |
Gross investment in consumer lease financing receivables |
|
|
622 |
|
|
13,405 |
Net deferred origination fees |
|
|
(2) |
|
|
(18) |
Unearned income |
|
|
(5) |
|
|
(497) |
Total net investment in consumer lease financing receivables |
|
$ |
615 |
|
$ |
12,890 |
The future lease rental payments due from customers on direct financing leases at December 31, 2012, totaled $1.5 billion and were as follows: $0.5 billion in 2013, $0.3 billion in 2014, $0.2 billion in 2015, $0.2 billion in 2016, $0.1 billion in 2017, and $0.2 thereafter.
Fidelity Bank acquisition
(See Note 26 for additional information regarding the Fidelity Bank acquisition).
On March 30, 2012, Huntington acquired the loans of Fidelity Bank located in Dearborn, Michigan from the FDIC. Under the agreement, loans with a fair value of $523.9 million were transferred to Huntington. These loans were recorded at fair value in accordance with applicable accounting guidance, ASC 805. The fair values for the loans were estimated using discounted cash flow analyses using interest rates currently being offered for loans with similar terms (Level 3), and reflected an estimate of probable losses and the credit risk associated with the loans.
Purchased Credit-Impaired Loans
The fair values for purchased credit-impaired loans were estimated using discounted cash flow analyses, including interest rates currently being offered for loans with similar terms (Level 3) and prepayment assumptions. This value was reduced by an estimate of probable losses and the credit risk associated with the loans.
The following table presents a rollforward of the accretable yield for the year ended December 31, 2012:
|
|
|
(dollar amounts in thousands) |
2012 |
Balance at January 1, |
$ |
--- |
Impact of acquisition on March 30, |
|
27,586 |
Adjustments resulting from changes in purchase price allocation |
|
3,625 |
Accretion |
|
(7,960) |
Balance at December 31, |
$ |
23,251 |
|
|
|
At December 31, 2012, there was no allowance for loan losses recorded on the purchased impaired loan portfolio and no adjustment to either the accretable or nonaccretable yield was required. The following table reflects the ending and unpaid balances of all contractually required payments and carrying amounts of the acquired loans at December 31, 2012:
|
|
December 31, 2012 |
(in thousands) |
|
Ending Balance |
|
|
Unpaid Balance |
Commercial and industrial |
$ |
54,472 |
|
$ |
80,294 |
Commercial real estate |
|
126,923 |
|
|
226,093 |
Residential mortgage |
|
2,243 |
|
|
4,104 |
Other consumer |
|
140 |
|
|
245 |
Total |
$ |
183,778 |
|
$ |
310,736 |
Loan Purchases and Sales
The following table summarizes significant portfolio loan purchase and sale activity for the years ended December 31, 2012, and 2011.
|
|
|
Commercial |
Commercial |
|
Home |
Residential |
Other |
|
|
and Industrial |
Real Estate |
Automobile |
Equity |
Mortgage |
Consumer |
Total |
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio loans purchased during the: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012 |
$ |
568,467 |
$ |
378,122 |
$ |
--- |
$ |
13,025 |
$ |
62,324 |
$ |
85 |
$ |
1,022,023 |
|
|
Year ended December 31, 2011 |
|
--- |
|
--- |
|
59,578 |
|
--- |
|
--- |
|
--- |
|
59,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio loans sold or transferred to loans held for sale during the: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012 |
|
238,121 |
|
74,703 |
|
2,783,748 |
|
--- |
|
389,603 |
|
--- |
|
3,486,175 |
|
|
Year ended December 31, 2011 |
|
256,313 |
|
56,123 |
|
2,250,033 |
|
--- |
|
257,100 |
|
--- |
|
2,819,569 |
NALs and Past Due Loans
The following table presents NALs by loan class for the years ended December 31, 2012 and 2011 (1):
|
|
|
December 31, |
(dollar amounts in thousands) |
|
2012 |
|
2011 |
|
|
|
|
|
|
Commercial and industrial: |
|
|
|
|
|
Owner occupied |
$ |
53,009 |
$ |
88,415 |
|
Other commercial and industrial |
|
37,696 |
|
113,431 |
Total commercial and industrial |
$ |
90,705 |
$ |
201,846 |
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
Retail properties |
$ |
31,791 |
$ |
58,415 |
|
Multi family |
|
19,765 |
|
39,921 |
|
Office |
|
30,341 |
|
33,202 |
|
Industrial and warehouse |
|
6,841 |
|
30,119 |
|
Other commercial real estate |
|
38,390 |
|
68,232 |
Total commercial real estate |
$ |
127,128 |
$ |
229,889 |
|
|
|
|
|
|
Automobile |
$ |
7,823 |
$ |
--- |
|
|
|
|
|
|
Home equity: |
|
|
|
|
|
Secured by first-lien |
$ |
27,091 |
$ |
20,012 |
|
Secured by junior-lien |
|
32,434 |
|
20,675 |
Total home equity |
$ |
59,525 |
$ |
40,687 |
|
|
|
|
|
|
Residential mortgage |
$ |
122,452 |
$ |
68,658 |
|
|
|
|
|
|
Other consumer |
$ |
--- |
$ |
--- |
Total nonaccrual loans |
$ |
407,633 |
$ |
541,080 |
|
|
|
|
|
|
(1) |
December 31, 2012, amounts included $60.1 million related to Chapter 7 bankruptcy loans. |
The amount of interest that would have been recorded under the original terms for total NAL loans was $40.4 million for 2012, $38.4 million for 2011, and $59.7 million for 2010. The total amount of interest recorded to interest income for these loans was $4.8 million, $5.1 million, and $5.5 million in 2012, 2011, and 2010, respectively.
The following table presents an aging analysis of loans and leases for the years ended December 31, 2012 and 2011 (1):
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90 or more
|
(dollar amounts in thousands) |
Past Due |
|
|
|
Total Loans |
|
days past due
|
|
30-59 days |
60-89 days |
90 or more days |
Total |
|
Current |
and Leases |
|
and accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
11,409 |
$ |
6,302 |
$ |
31,997 |
$ |
49,708 |
|
$ |
4,236,211 |
$ |
4,285,919 |
|
$ |
---
|
|
Purchased credit-impaired |
|
986 |
|
3,533 |
|
26,648 |
|
31,167 |
|
|
23,305 |
|
54,472 |
|
|
26,648(2)
|
|
Other commercial and industrial |
|
20,273 |
|
4,211 |
|
14,786 |
|
39,270 |
|
|
12,591,028 |
|
12,630,298 |
|
|
---
|
Total commercial and industrial |
$ |
32,668 |
$ |
14,046 |
$ |
73,431 |
$ |
120,145 |
|
$ |
16,850,544 |
$ |
16,970,689 |
|
$ |
26,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
3,459 |
$ |
4,203 |
$ |
9,677 |
$ |
17,339 |
|
$ |
1,413,520 |
$ |
1,430,859 |
|
$ |
---
|
|
Multi family |
|
7,961 |
|
1,314 |
|
12,062 |
|
21,337 |
|
|
963,063 |
|
984,400 |
|
|
---
|
|
Office |
|
1,054 |
|
2,415 |
|
23,335 |
|
26,804 |
|
|
909,310 |
|
936,114 |
|
|
---
|
|
Industrial and warehouse |
|
6,597 |
|
118 |
|
5,433 |
|
12,148 |
|
|
584,754 |
|
596,902 |
|
|
---
|
|
Purchased credit-impaired |
|
556 |
|
1,751 |
|
56,660 |
|
58,967 |
|
|
67,956 |
|
126,923 |
|
|
56,660(2)
|
|
Other commercial real estate |
|
2,725 |
|
2,192 |
|
25,463 |
|
30,380 |
|
|
1,293,662 |
|
1,324,042 |
|
|
---
|
Total commercial real estate |
$ |
22,352 |
$ |
11,993 |
$ |
132,630 |
$ |
166,975 |
|
$ |
5,232,265 |
$ |
5,399,240 |
|
$ |
56,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
36,267 |
$ |
7,803 |
$ |
4,438 |
$ |
48,508 |
|
$ |
4,585,312 |
$ |
4,633,820 |
|
$ |
4,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
$ |
26,288 |
$ |
9,992 |
$ |
28,322 |
$ |
64,602 |
|
$ |
4,315,985 |
$ |
4,380,587 |
|
$ |
5,202
|
|
Secured by junior-lien |
|
34,365 |
|
16,553 |
|
35,150 |
|
86,068 |
|
|
3,868,687 |
|
3,954,755 |
|
|
12,998
|
Total home equity |
$ |
60,653 |
$ |
26,545 |
$ |
63,472 |
$ |
150,670 |
|
$ |
8,184,672 |
$ |
8,335,342 |
|
$ |
18,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
118,582 |
$ |
44,747 |
$ |
164,035 |
$ |
327,364 |
|
$ |
4,640,065 |
$ |
4,967,429 |
|
$ |
92,925(3)
|
|
Purchased credit-impaired |
|
58 |
|
--- |
|
609 |
|
667 |
|
|
1,576 |
|
2,243 |
|
|
609(2)
|
Total residential mortgage |
$ |
118,640 |
$ |
44,747 |
$ |
164,644 |
$ |
328,031 |
|
$ |
4,641,641 |
$ |
4,969,672 |
|
$ |
93,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
$ |
7,431 |
$ |
2,117 |
$ |
1,672 |
$ |
11,220 |
|
$ |
408,302 |
$ |
419,522 |
|
$ |
1,672
|
|
Purchased credit-impaired |
|
--- |
|
76 |
|
--- |
|
76 |
|
|
64 |
|
140 |
|
|
---(2)
|
Total other consumer |
$ |
7,431 |
$ |
2,193 |
$ |
1,672 |
$ |
11,296 |
|
$ |
408,366 |
$ |
419,662 |
|
$ |
1,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases |
$ |
278,011 |
$ |
107,327 |
$ |
440,287 |
$ |
825,625 |
|
$ |
39,902,800 |
$ |
40,728,425 |
|
$ |
201,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90 or more
|
(dollar amounts in thousands) |
Past Due |
|
|
|
Total Loans |
|
days past due
|
|
30-59 days |
60-89 days |
90 or more days |
Total |
|
Current |
and Leases |
|
and accruing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
10,607 |
$ |
7,433 |
$ |
58,513 |
$ |
76,553 |
|
$ |
3,936,203 |
$ |
4,012,756 |
|
$ |
---
|
|
Other commercial and industrial |
|
32,962 |
|
7,579 |
|
60,833 |
|
101,374 |
|
|
10,585,241 |
|
10,686,615 |
|
|
---
|
Total commercial and industrial |
$ |
43,569 |
$ |
15,012 |
$ |
119,346 |
$ |
177,927 |
|
$ |
14,521,444 |
$ |
14,699,371 |
|
$ |
---
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
3,090 |
$ |
823 |
$ |
33,952 |
$ |
37,865 |
|
$ |
1,547,618 |
$ |
1,585,483 |
|
$ |
---
|
|
Multi family |
|
5,022 |
|
1,768 |
|
28,317 |
|
35,107 |
|
|
908,438 |
|
943,545 |
|
|
---
|
|
Office |
|
3,134 |
|
792 |
|
30,041 |
|
33,967 |
|
|
990,897 |
|
1,024,864 |
|
|
---
|
|
Industrial and warehouse |
|
2,834 |
|
115 |
|
18,203 |
|
21,152 |
|
|
708,390 |
|
729,542 |
|
|
---
|
|
Other commercial real estate |
|
6,894 |
|
3,625 |
|
48,739 |
|
59,258 |
|
|
1,483,017 |
|
1,542,275 |
|
|
---
|
Total commercial real estate |
$ |
20,974 |
$ |
7,123 |
$ |
159,252 |
$ |
187,349 |
|
$ |
5,638,360 |
$ |
5,825,709 |
|
$ |
---
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
42,162 |
$ |
9,046 |
$ |
6,265 |
$ |
57,473 |
|
$ |
4,399,973 |
$ |
4,457,446 |
|
$ |
6,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
$ |
17,260 |
$ |
8,822 |
$ |
29,259 |
$ |
55,341 |
|
$ |
3,760,238 |
$ |
3,815,579 |
|
$ |
9,247
|
|
Secured by junior-lien |
|
32,334 |
|
18,357 |
|
31,626 |
|
82,317 |
|
|
4,317,517 |
|
4,399,834 |
|
|
10,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
134,228 |
$ |
45,774 |
$ |
204,648 |
$ |
384,650 |
|
$ |
4,843,626 |
$ |
5,228,276 |
|
$ |
141,901(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
$ |
7,655 |
$ |
1,502 |
$ |
1,988 |
$ |
11,145 |
|
$ |
486,423 |
$ |
497,568 |
|
$ |
1,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases |
$ |
298,182 |
$ |
105,636 |
$ |
552,384 |
$ |
956,202 |
|
$ |
37,967,581 |
$ |
38,923,783 |
|
$ |
170,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
NALs are included in this aging analysis based on the loan's past due status.
|
(2) |
All amounts represent accruing purchased credit-impaired loans related to the FDIC-assisted Fidelity Bank acquisition. Under the applicable accounting guidance (ASC-310-30), the loans were recorded at fair value upon acquisition and remain in accruing status.
|
(3) |
Includes $90,816 thousand guaranteed by the U.S. government.
|
(4) |
Includes $96,703 thousand guaranteed by the U.S. government.
|
Allowance for Credit Losses
The ACL is increased through a provision for credit losses that is charged to earnings, based on Management's quarterly evaluation, and is reduced by NCOs and the ACL associated with securitized or sold loans. There were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period's ALLL and AULC. The impact of the Chapter 7 bankruptcy loans was primarily associated with NALs and NCOs, with minimal impact to the ALLL.
The following table presents ALLL and AULC activity by portfolio segment for the years ended December 31, 2012, 2011, and 2010:
|
|
|
Commercial |
Commercial |
|
Home |
Residential |
Other |
|
|
|
and Industrial |
Real Estate |
Automobile |
Equity |
Mortgage |
Consumer |
Total |
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2012: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLL balance, beginning of period |
$ |
275,367 |
$ |
388,706 |
$ |
38,282 |
$ |
143,873 |
$ |
87,194 |
$ |
31,406 |
$ |
964,828 |
|
|
Loan charge-offs |
|
(101,475) |
|
(118,051) |
|
(26,070) |
|
(124,286) |
|
(52,228) |
|
(33,090) |
|
(455,200) |
|
|
Recoveries of loans previously charged-off |
|
37,227 |
|
39,622 |
|
16,628 |
|
7,907 |
|
4,305 |
|
7,049 |
|
112,738 |
|
|
Provision for loan and lease losses |
|
29,932 |
|
(24,908) |
|
12,964 |
|
91,270 |
|
24,046 |
|
21,889 |
|
155,193 |
|
|
Allowance for loans sold or transferred to loans held for sale |
|
--- |
|
--- |
|
(6,825) |
|
--- |
|
(1,659) |
|
--- |
|
(8,484) |
|
ALLL balance, end of period |
$ |
241,051 |
$ |
285,369 |
$ |
34,979 |
$ |
118,764 |
$ |
61,658 |
$ |
27,254 |
$ |
769,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AULC balance, beginning of period |
$ |
39,658 |
$ |
5,852 |
$ |
--- |
$ |
2,134 |
$ |
1 |
$ |
811 |
$ |
48,456 |
|
|
Provision for unfunded loan commitments and letters of credit |
|
(5,790) |
|
(1,112) |
|
--- |
|
(778) |
|
2 |
|
(127) |
|
(7,805) |
|
AULC balance, end of period |
$ |
33,868 |
$ |
4,740 |
$ |
--- |
$ |
1,356 |
$ |
3 |
$ |
684 |
$ |
40,651 |
|
ACL balance, end of period |
$ |
274,919 |
$ |
290,109 |
$ |
34,979 |
$ |
120,120 |
$ |
61,661 |
$ |
27,938 |
$ |
809,726 |
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLL balance, beginning of period |
$ |
340,614 |
$ |
588,251 |
$ |
49,488 |
$ |
150,630 |
$ |
93,289 |
$ |
26,736 |
$ |
1,249,008 |
|
|
Loan charge-offs |
|
(134,385) |
|
(182,759) |
|
(33,593) |
|
(109,427) |
|
(65,069) |
|
(32,520) |
|
(557,753) |
|
|
Recoveries of loans previously charged-off |
|
44,686 |
|
34,658 |
|
18,526 |
|
7,630 |
|
8,388 |
|
6,776 |
|
120,664 |
|
|
Provision for loan and lease losses |
|
24,452 |
|
(51,444) |
|
17,042 |
|
95,040 |
|
52,226 |
|
30,414 |
|
167,730 |
|
|
Allowance for loans sold or transferred to loans held for sale |
|
--- |
|
--- |
|
(13,181) |
|
--- |
|
(1,640) |
|
--- |
|
(14,821) |
|
ALLL balance, end of period |
$ |
275,367 |
$ |
388,706 |
$ |
38,282 |
$ |
143,873 |
$ |
87,194 |
$ |
31,406 |
$ |
964,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AULC balance, beginning of period |
$ |
32,726 |
$ |
6,158 |
$ |
--- |
$ |
2,348 |
$ |
1 |
$ |
894 |
$ |
42,127 |
|
|
Provision for unfunded loan commitments and letters of credit |
|
6,932 |
|
(306) |
|
--- |
|
(214) |
|
--- |
|
(83) |
|
6,329 |
|
AULC balance, end of period |
$ |
39,658 |
$ |
5,852 |
$ |
--- |
$ |
2,134 |
$ |
1 |
$ |
811 |
$ |
48,456 |
|
ACL balance, end of period |
$ |
315,025 |
$ |
394,558 |
$ |
38,282 |
$ |
146,007 |
$ |
87,195 |
$ |
32,217 |
$ |
1,013,284 |
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLL balance, beginning of period |
$ |
492,205 |
$ |
751,875 |
$ |
57,951 |
$ |
102,039
|
$ |
55,903
|
$ |
22,506 |
$ |
1,482,479 |
|
|
Loan charge-offs |
|
(316,771) |
|
(303,995) |
|
(46,308) |
|
(140,831)(1)
|
|
(163,427)(2)
|
|
(32,575) |
|
(1,003,907) |
|
|
Recoveries of loans previously charged-off |
|
61,839 |
|
28,433 |
|
19,736 |
|
1,458
|
|
10,532
|
|
7,435 |
|
129,433 |
|
|
Provision for loan and lease losses |
|
103,341 |
|
111,938 |
|
18,109 |
|
187,964
|
|
190,577
|
|
29,370 |
|
641,299 |
|
|
Allowance for loans sold or transferred to loans held for sale |
|
--- |
|
--- |
|
--- |
|
---
|
|
(296)
|
|
--- |
|
(296) |
|
ALLL balance, end of period |
$ |
340,614 |
$ |
588,251 |
$ |
49,488 |
$ |
150,630
|
$ |
93,289
|
$ |
26,736 |
$ |
1,249,008 |
|
AULC balance, beginning of period |
$ |
34,555 |
$ |
12,194 |
$ |
--- |
$ |
1,179
|
$ |
2
|
$ |
949 |
$ |
48,879 |
|
|
Provision for unfunded loan commitments and letters-of-credit |
|
(1,829) |
|
(6,036) |
|
--- |
|
1,169
|
|
(1)
|
|
(55) |
|
(6,752) |
|
AULC balance, end of period |
|
32,726 |
|
6,158 |
|
--- |
|
2,348
|
|
1
|
|
894 |
|
42,127 |
|
ACL balance, end of period |
$ |
373,340 |
$ |
594,409 |
$ |
49,488 |
$ |
152,978
|
$ |
93,290
|
$ |
27,630 |
$ |
1,291,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Reflects $21 million of Franklin-related charge-offs. |
(2) |
Reflects $71 million of Franklin-related charge-offs. |
Credit Quality Indicators
To facilitate the monitoring of credit quality for C&I and CRE loans, and for purposes of determining an appropriate ACL level for these loans, Huntington utilizes the following categories of credit grades:
Pass = Higher quality loans that do not fit any of the other categories described below.
OLEM = The credit risk may be relatively minor yet represent a risk given certain specific circumstances. If the potential weaknesses are not monitored or mitigated, the loan may weaken or the collateral may be inadequate to protect Huntington's position in the future. For these reasons, Huntington considers the loans to be potential problem loans.
Substandard = Inadequately protected loans by the borrower's ability to repay, equity, and/or the collateral pledged to secure the loan. These loans have identified weaknesses that could hinder normal repayment or collection of the debt. It is likely Huntington will sustain some loss if any identified weaknesses are not mitigated.
Doubtful = Loans that have all of the weaknesses inherent in those loans classified as Substandard, with the added elements of the full collection of the loan is improbable and that the possibility of loss is high.
The categories above, which are derived from standard regulatory rating definitions, are assigned upon initial approval of the loan or lease and subsequently updated as appropriate.
Commercial loans categorized as OLEM, Substandard, or Doubtful are considered Criticized loans. Commercial loans categorized as Substandard or Doubtful are also considered Classified loans.
For all classes within all consumer loan portfolios, each loan is assigned a specific PD factor that is partially based on the borrower's most recent credit bureau score (FICO), which we update quarterly. A FICO credit bureau score is a credit score developed by Fair Isaac Corporation based on data provided by the credit bureaus. The FICO credit bureau score is widely accepted as the standard measure of consumer credit risk used by lenders, regulators, rating agencies, and consumers. The higher the FICO credit bureau score, the higher likelihood of repayment and therefore, an indicator of higher credit quality.
Huntington assesses the risk in the loan portfolio by utilizing numerous risk characteristics. The classifications described above, and also presented in the table below, represent one of those characteristics that are closely monitored in the overall credit risk management processes.
The following table presents each loan and lease class by credit quality indicator for the years ended December 31, 2012 and 2011:
|
|
December 31, 2012
|
|
Credit Risk Profile by UCS classification
|
(dollar amounts in thousands) |
Pass |
OLEM |
Substandard |
Doubtful |
Total
|
Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
3,970,597 |
$ |
108,731 |
$ |
205,822 |
$ |
769 |
$ |
4,285,919
|
|
Purchased impaired |
|
1,663 |
|
6,555 |
|
46,254 |
|
--- |
|
54,472
|
|
Other commercial and industrial |
|
12,146,017 |
|
145,111 |
|
337,805 |
|
1,365 |
|
12,630,298
|
Total commercial and industrial |
$ |
16,118,277 |
$ |
260,397 |
$ |
589,881 |
$ |
2,134 |
$ |
16,970,689
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
1,184,987 |
$ |
63,976 |
$ |
181,896 |
$ |
--- |
$ |
1,430,859
|
|
Multi family |
|
902,616 |
|
24,098 |
|
57,548 |
|
138 |
|
984,400
|
|
Office |
|
826,533 |
|
26,488 |
|
83,093 |
|
--- |
|
936,114
|
|
Industrial and warehouse |
|
540,484 |
|
15,132 |
|
41,286 |
|
--- |
|
596,902
|
|
Purchased impaired |
|
10,052 |
|
18,085 |
|
98,786 |
|
--- |
|
126,923
|
|
Other commercial real estate |
|
1,177,213 |
|
43,454 |
|
103,262 |
|
113 |
|
1,324,042
|
Total commercial real estate |
$ |
4,641,885 |
$ |
191,233 |
$ |
565,871 |
$ |
251 |
$ |
5,399,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Risk Profile by FICO score (1)
|
|
|
750+ |
650-749 |
<650 |
Other (2) |
Total
|
Automobile |
$ |
2,233,439 |
$ |
1,900,824 |
$ |
682,518 |
$ |
117,039 |
$ |
4,933,820(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity: |
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
$ |
2,618,888 |
$ |
1,345,621 |
$ |
357,019 |
$ |
59,059 |
$ |
4,380,587
|
|
Secured by junior-lien |
|
2,046,143 |
|
1,375,636 |
|
491,226 |
|
41,750 |
|
3,954,755
|
Total home equity |
$ |
4,665,031 |
$ |
2,721,257 |
$ |
848,245 |
$ |
100,809 |
$ |
8,335,342
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage: |
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
2,561,210 |
$ |
1,673,485 |
$ |
711,750 |
$ |
20,984 |
$ |
4,967,429
|
|
Purchased impaired |
|
373 |
|
1,303 |
|
567 |
|
--- |
|
2,243
|
Total residential mortgage |
$ |
2,561,583 |
$ |
1,674,788 |
$ |
712,317 |
$ |
20,984 |
$ |
4,969,672
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
$ |
169,792 |
$ |
167,389 |
$ |
59,815 |
$ |
22,526 |
$ |
419,522
|
|
Purchased impaired |
|
--- |
|
93 |
|
47 |
|
--- |
|
140
|
Total other consumer loans |
$ |
169,792 |
$ |
167,482 |
$ |
59,862 |
$ |
22,526 |
$ |
419,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
Credit Risk Profile by UCS classification
|
(dollar amounts in thousands) |
Pass |
OLEM |
Substandard |
Doubtful |
Total
|
Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
3,624,103 |
$ |
101,897 |
$ |
285,561 |
$ |
1,195 |
$ |
4,012,756
|
|
Other commercial and industrial |
|
10,108,946 |
|
145,963 |
|
425,882 |
|
5,824 |
|
10,686,615
|
Total commercial and industrial |
$ |
13,733,049 |
$ |
247,860 |
$ |
711,443 |
$ |
7,019 |
$ |
14,699,371
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
1,191,471 |
$ |
122,337 |
$ |
271,675 |
$ |
--- |
$ |
1,585,483
|
|
Multi family |
|
801,717 |
|
48,094 |
|
93,449 |
|
285 |
|
943,545
|
|
Office |
|
896,230 |
|
67,050 |
|
61,476 |
|
108 |
|
1,024,864
|
|
Industrial and warehouse |
|
649,165 |
|
9,688 |
|
70,621 |
|
68 |
|
729,542
|
|
Other commercial real estate |
|
1,112,751 |
|
110,276 |
|
318,479 |
|
769 |
|
1,542,275
|
Total commercial real estate |
$ |
4,651,334 |
$ |
357,445 |
$ |
815,700 |
$ |
1,230 |
$ |
5,825,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Risk Profile by FICO score (1)
|
|
|
750+ |
650-749 |
<650 |
Other (2) |
Total
|
Automobile |
$ |
2,635,082 |
$ |
2,276,990 |
$ |
707,141 |
$ |
88,233 |
$ |
5,707,446(4)
|
Home equity: |
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
|
2,196,566 |
|
1,287,444 |
|
329,670 |
|
1,899 |
|
3,815,579
|
|
Secured by junior-lien |
|
2,119,292 |
|
1,646,117 |
|
625,298 |
|
9,127 |
|
4,399,834
|
Residential mortgage |
|
2,454,401 |
|
1,752,409 |
|
723,377 |
|
298,089 |
|
5,228,276
|
Other consumer |
|
185,333 |
|
206,749 |
|
83,431 |
|
22,055 |
|
497,568
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Reflects currently updated customer credit scores.
|
(2) |
Reflects deferred fees and costs, loans in process, loans to legal entities, etc.
|
(3) |
Includes $0.3 billion of loans reflected as loans held for sale related to an automobile securitization expected to be completed in 2013.
|
(4) |
Includes $1.25 billion of loans reflected as loans held for sale related to an automobile securitization completed in 2012.
|
Impaired Loans
A loan is considered to be impaired when, based on current information and events, it is probable that not all amounts due according to the contractual terms of the loan agreement will be collected. The following tables present the balance of the ALLL attributable to loans by portfolio segment individually and collectively evaluated for impairment and the related loan and lease balance for the years ended December 31, 2012, 2011, and 2010 (1):
|
|
|
Commercial |
Commercial |
|
|
Residential |
Other |
|
|
and Industrial |
Real Estate |
Automobile |
Home Equity |
Mortgage |
Consumer |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLL at December 31, 2012: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to purchased credit-impaired loans |
$ |
--- |
$ |
--- |
$ |
--- |
$ |
--- |
$ |
--- |
$ |
--- |
$ |
--- |
|
|
Attributable to loans individually evaluated for impairment |
|
11,694 |
|
31,133 |
|
1,446 |
|
4,783 |
|
14,176 |
|
213 |
|
63,445 |
|
|
Attributable to loans collectively evaluated for impairment |
|
229,357 |
|
254,236 |
|
33,533 |
|
113,981 |
|
47,482 |
|
27,041 |
|
705,630 |
|
Total ALLL balance |
$ |
241,051 |
$ |
285,369 |
$ |
34,979 |
$ |
118,764 |
$ |
61,658 |
$ |
27,254 |
$ |
769,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Leases at December 31, 2012: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to purchased credit-impaired loans |
$ |
54,472 |
$ |
126,923 |
$ |
--- |
$ |
--- |
$ |
2,243 |
$ |
140 |
$ |
183,778 |
|
|
Individually evaluated for impairment |
|
119,535 |
|
298,891 |
|
43,607 |
|
117,532 |
|
374,526 |
|
2,657 |
|
956,748 |
|
|
Collectively evaluated for impairment |
|
16,796,682 |
|
4,973,426 |
|
4,590,213 |
|
8,217,810 |
|
4,592,903 |
|
416,865 |
|
39,587,899 |
|
Total loans evaluated for impairment |
$ |
16,970,689 |
$ |
5,399,240 |
$ |
4,633,820 |
$ |
8,335,342 |
$ |
4,969,672 |
$ |
419,662 |
$ |
40,728,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With allowance assigned to the loan and lease balances |
$ |
86,644 |
$ |
193,413 |
$ |
43,607 |
$ |
117,532 |
$ |
374,526 |
$ |
2,657 |
$ |
818,379 |
|
|
With no allowance assigned to the loan and lease balances |
|
87,363 |
|
232,401 |
|
--- |
|
--- |
|
2,243 |
|
140 |
|
322,147 |
|
Total |
$ |
174,007 |
$ |
425,814 |
$ |
43,607 |
$ |
117,532 |
$ |
376,769 |
$ |
2,797 |
$ |
1,140,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balance of impaired loans |
$ |
179,692 |
$ |
474,362 |
$ |
39,139 |
$ |
79,523 |
$ |
348,727 |
$ |
4,448 |
$ |
1,125,891 |
|
ALLL on impaired loans |
|
11,694 |
|
31,133 |
|
1,446 |
|
4,783 |
|
14,176 |
|
213 |
|
63,445 |
|
|
|
Commercial |
Commercial |
|
|
Residential |
Other |
|
|
and Industrial |
Real Estate |
Automobile |
Home Equity |
Mortgage |
Consumer |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLL at December 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to loans individually evaluated for impairment |
|
30,613 |
|
55,306 |
|
1,393 |
|
1,619 |
|
16,091 |
|
530 |
|
105,552 |
|
|
Attributable to loans collectively evaluated for impairment |
|
244,754 |
|
333,400 |
|
36,889 |
|
142,254 |
|
71,103 |
|
30,876 |
|
859,276 |
|
Total ALLL balance at December 31, 2011 |
$ |
275,367 |
$ |
388,706 |
$ |
38,282 |
$ |
143,873 |
$ |
87,194 |
$ |
31,406 |
$ |
964,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Leases at December 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
|
153,724 |
|
387,402 |
|
36,574 |
|
52,593 |
|
335,768 |
|
6,220 |
|
972,281 |
|
|
Collectively evaluated for impairment |
|
14,545,647 |
|
5,438,307 |
|
4,420,872 |
|
8,162,820 |
|
4,892,508 |
|
491,348 |
|
37,951,502 |
|
Total loans evaluated for impairment |
$ |
14,699,371 |
$ |
5,825,709 |
$ |
4,457,446 |
$ |
8,215,413 |
$ |
5,228,276 |
$ |
497,568 |
$ |
38,923,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With allowance assigned to the loan and lease balances |
$ |
153,724 |
$ |
305,390 |
$ |
36,574 |
$ |
52,593 |
$ |
335,768 |
$ |
6,220 |
$ |
890,269 |
|
|
With no allowance assigned to the loan and lease balances |
|
--- |
|
82,012 |
|
--- |
|
--- |
|
--- |
|
--- |
|
82,012 |
|
Total |
$ |
153,724 |
$ |
387,402 |
$ |
36,574 |
$ |
52,593 |
$ |
335,768 |
$ |
6,220 |
$ |
972,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balance of impaired loans |
$ |
165,179 |
$ |
358,429 |
$ |
32,476 |
$ |
42,903 |
$ |
335,549 |
$ |
7,699 |
$ |
942,235 |
|
ALLL on impaired loans |
|
30,613 |
|
55,306 |
|
1,393 |
|
1,619 |
|
16,091 |
|
530 |
|
105,552 |
|
Commercial and Industrial |
Commercial Real Estate |
Automobile |
Home Equity |
Residential Mortgage |
Other Consumer |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLL at December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to loans individually evaluated for impairment |
|
63,307 |
|
65,130 |
|
1,477 |
|
1,498 |
|
11,780 |
|
668 |
|
143,860 |
|
|
Attributable to loans collectively evaluated for impairment |
|
277,307 |
|
523,121 |
|
48,011 |
|
149,132 |
|
81,509 |
|
26,068 |
|
1,105,148 |
|
ALLL balance at December 31, 2010: |
$ |
340,614 |
$ |
588,251 |
$ |
49,488 |
$ |
150,630 |
$ |
93,289 |
$ |
26,736 |
$ |
1,249,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and Leases at December 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollar amounts in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
|
198,120 |
|
310,668 |
|
29,764 |
|
37,257 |
|
334,207 |
|
9,565 |
|
919,581 |
|
|
Collectively evaluated for impairment |
|
12,865,173 |
|
6,340,488 |
|
5,584,947 |
|
7,675,897 |
|
4,166,159 |
|
554,262 |
|
37,186,926 |
|
Total loans evaluated for impairment |
$ |
13,063,293 |
$ |
6,651,156 |
$ |
5,614,711 |
$ |
7,713,154 |
$ |
4,500,366 |
$ |
563,827 |
$ |
38,106,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of ending balance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With allowance assigned to the loan and lease balances |
$ |
173,243 |
$ |
241,256 |
$ |
29,764 |
$ |
37,257 |
$ |
334,207 |
$ |
9,565 |
$ |
825,292 |
|
|
With no allowance assigned to the loan and lease balances |
|
24,877 |
|
69,412 |
|
--- |
|
--- |
|
--- |
|
--- |
|
94,289 |
|
Total |
$ |
198,120 |
$ |
310,668 |
$ |
29,764 |
$ |
37,257 |
$ |
334,207 |
$ |
9,565 |
$ |
919,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balance of impaired loans |
$ |
230,647 |
$ |
471,080 |
$ |
26,281 |
$ |
33,808 |
$ |
293,256 |
$ |
9,163 |
$ |
1,064,235 |
|
ALLL on impaired loans |
|
63,308 |
|
65,129 |
|
1,477 |
|
1,498 |
|
11,780 |
|
668 |
|
143,860 |
The following tables present by class the ending, unpaid principal balance, and the related ALLL, along with the average balance and interest income recognized only for loans and leases individually evaluated for impairment and purchased credit-impaired loans for the years ended December 31, 2012 and 2011 (1), (2):
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
December 31, 2012 |
|
December 31, 2012 |
|
|
|
|
|
Unpaid |
|
|
|
|
|
Interest |
|
|
|
Ending |
Principal |
Related |
|
Average |
Income |
(dollar amounts in thousands) |
Balance |
Balance (5) |
Allowance |
|
Balance |
Recognized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
1,050 |
$ |
1,091 |
$ |
--- |
|
$ |
4,246 |
$ |
77 |
|
|
Purchased credit-impaired |
|
54,472 |
|
80,294 |
|
--- |
|
|
57,602 |
|
2,359 |
|
|
Other commercial and industrial |
|
31,841 |
|
54,520 |
|
--- |
|
|
11,922 |
|
555 |
|
Total commercial and industrial |
$ |
87,363 |
$ |
135,905 |
$ |
--- |
|
$ |
73,770 |
$ |
2,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
54,216 |
$ |
56,569 |
$ |
--- |
|
$ |
51,939 |
$ |
2,758 |
|
|
Multi family |
|
5,719 |
|
5,862 |
|
--- |
|
|
5,631 |
|
353 |
|
|
Office |
|
20,051 |
|
24,843 |
|
--- |
|
|
6,734 |
|
405 |
|
|
Industrial and warehouse |
|
15,013 |
|
17,476 |
|
--- |
|
|
9,877 |
|
501 |
|
|
Purchased credit-impaired |
|
126,923 |
|
226,093 |
|
--- |
|
|
141,278 |
|
5,497 |
|
|
Other commercial real estate |
|
10,479 |
|
10,728 |
|
--- |
|
|
15,125 |
|
501 |
|
Total commercial real estate |
$ |
232,401 |
$ |
341,571 |
$ |
--- |
|
$ |
230,584 |
$ |
10,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
--- |
$ |
--- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
--- |
$ |
--- |
|
|
Secured by junior-lien |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
Total home equity |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
--- |
$ |
--- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
--- |
$ |
--- |
|
|
Purchased credit-impaired |
|
2,243 |
|
4,104 |
|
--- |
|
|
3,521 |
|
97 |
|
Total residential mortgage |
$ |
2,243 |
$ |
4,104 |
$ |
--- |
|
$ |
3,521 |
$ |
97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
--- |
$ |
--- |
|
|
Purchased credit-impaired |
|
140 |
|
245 |
|
--- |
|
|
622 |
|
6 |
|
Total other consumer |
$ |
140 |
$ |
245 |
$ |
--- |
|
$ |
622 |
$ |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial: (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
46,266 |
$ |
56,925 |
$ |
5,730 |
|
$ |
40,029 |
$ |
1,327 |
|
|
Purchased credit-impaired |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
|
Other commercial and industrial |
|
40,378 |
|
52,996 |
|
5,964 |
|
|
65,893 |
|
2,304 |
|
Total commercial and industrial |
$ |
86,644 |
$ |
109,921 |
$ |
11,694 |
|
$ |
105,922 |
$ |
3,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
65,004 |
$ |
73,000 |
$ |
8,144 |
|
$ |
107,842 |
$ |
4,730 |
|
|
Multi family |
|
17,410 |
|
18,531 |
|
2,662 |
|
|
27,953 |
|
1,371 |
|
|
Office |
|
40,375 |
|
45,164 |
|
9,214 |
|
|
18,751 |
|
379 |
|
|
Industrial and warehouse |
|
22,450 |
|
25,374 |
|
1,092 |
|
|
24,454 |
|
717 |
|
|
Purchased credit-impaired |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
|
Other commercial real estate |
|
48,174 |
|
63,148 |
|
10,021 |
|
|
64,778 |
|
2,413 |
|
Total commercial real estate |
$ |
193,413 |
$ |
225,217 |
$ |
31,133 |
|
$ |
243,778 |
$ |
9,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
43,607 |
$ |
44,790 |
$ |
1,446 |
|
$ |
39,139 |
$ |
3,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
$ |
76,258 |
$ |
80,831 |
$ |
1,329 |
|
$ |
54,898 |
$ |
2,651 |
|
|
Secured by junior-lien |
|
41,274 |
|
63,390 |
|
3,454 |
|
|
24,625 |
|
1,382 |
|
Total home equity |
$ |
117,532 |
$ |
144,221 |
$ |
4,783 |
|
$ |
79,523 |
$ |
4,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage: (6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage |
$ |
374,526 |
$ |
413,583 |
$ |
14,176 |
|
$ |
345,206 |
$ |
11,420 |
|
|
Purchased credit-impaired |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
Total residential mortgage |
$ |
374,526 |
$ |
413,583 |
$ |
14,176 |
|
$ |
345,206 |
$ |
11,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other consumer |
$ |
2,657 |
$ |
2,657 |
$ |
213 |
|
$ |
3,826 |
$ |
126 |
|
|
Purchased credit-impaired |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
Total other consumer |
$ |
2,657 |
$ |
2,657 |
$ |
213 |
|
$ |
3,826 |
$ |
126 |
(dollar amounts in thousands) |
|
|
|
|
|
|
|
Year Ended |
|
December 31, 2011 |
|
December 31, 2011 |
|
|
|
|
|
Unpaid |
|
|
|
|
|
Interest |
|
|
|
Ending |
Principal |
Related |
|
Average |
Income |
|
|
|
Balance |
Balance (5) |
Allowance |
|
Balance |
Recognized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
6,285 |
$ |
169 |
|
|
Other commercial and industrial |
|
--- |
|
--- |
|
--- |
|
|
5,040 |
|
162 |
|
Total commercial and industrial |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
11,325 |
$ |
331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
43,970 |
$ |
45,192 |
$ |
--- |
|
$ |
26,717 |
$ |
1,082 |
|
|
Multi family |
|
6,292 |
|
6,435 |
|
--- |
|
|
13,757 |
|
701 |
|
|
Office |
|
1,191 |
|
1,261 |
|
--- |
|
|
1,624 |
|
9 |
|
|
Industrial and warehouse |
|
8,163 |
|
9,945 |
|
--- |
|
|
3,961 |
|
131 |
|
|
Other commercial real estate |
|
22,396 |
|
38,401 |
|
--- |
|
|
25,077 |
|
796 |
|
Total commercial real estate |
$ |
82,012 |
$ |
101,234 |
$ |
--- |
|
$ |
71,136 |
$ |
2,719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
--- |
$ |
--- |
$ |
--- |
|
$ |
--- |
$ |
--- |
|
Home equity loans and lines-of-credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
|
Secured by junior-lien |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
Residential mortgage |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
Other consumer loans |
|
--- |
|
--- |
|
--- |
|
|
--- |
|
--- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and Industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
$ |
53,613 |
$ |
77,205 |
$ |
7,377 |
|
$ |
53,219 |
$ |
1,633 |
|
|
Other commercial and industrial |
|
100,111 |
|
117,469 |
|
23,236 |
|
|
100,635 |
|
2,952 |
|
Total commercial and industrial |
$ |
153,724 |
$ |
194,674 |
$ |
30,613 |
|
$ |
153,854 |
$ |
4,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail properties |
$ |
129,396 |
$ |
161,596 |
$ |
30,363 |
|
$ |
102,384 |
$ |
2,897 |
|
|
Multi family |
|
38,154 |
|
45,138 |
|
4,753 |
|
|
28,847 |
|
829 |
|
|
Office |
|
23,568 |
|
42,287 |
|
2,832 |
|
|
26,589 |
|
228 |
|
|
Industrial and warehouse |
|
29,435 |
|
47,373 |
|
3,136 |
|
|
42,862 |
|
740 |
|
|
Other commercial real estate |
|
84,837 |
|
119,212 |
|
14,222 |
|
|
86,611 |
|
2,326 |
|
Total commercial real estate |
$ |
305,390 |
$ |
415,606 |
$ |
55,306 |
|
$ |
287,293 |
$ |
7,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile |
$ |
36,574 |
$ |
36,574 |
$ |
1,393 |
|
$ |
32,476 |
$ |
2,982 |
|
Home equity loans and lines-of-credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured by first-lien |
|
35,842 |
|
35,842 |
|
626 |
|
|
26,956 |
|
1,201 |
|
|
Secured by junior-lien |
|
16,751 |
|
16,751 |
|
993 |
|
|
15,947 |
|
751 |
|
Residential mortgage |
|
335,768 |
|
361,161 |
|
16,091 |
|
|
335,549 |
|
12,894 |
|
Other consumer loans |
|
6,220 |
|
6,220 |
|
530 |
|
|
7,699 |
|
478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
These tables do not include loans fully charged-off. |
(2) |
All automobile, home equity, residential mortgage, and other consumer impaired loans included in these tables are considered impaired due to their status as a TDR. |
(3) |
At December 31, 2012, $44,265 thousand of the $86,644 thousand commercial and industrial loans with an allowance recorded were considered impaired due to their status as a TDR. |
(4) |
At December 31, 2012, $31,605 thousand of the $193,413 thousand commercial real estate loans with an allowance recorded were considered impaired due to their status as a TDR. |
(5) |
The differences between the ending balance and unpaid principal balance amounts represent partial charge-offs. |
(6) |
At December 31, 2012, $28,695 thousand of the $374,526 thousand residential mortgage loans with an allowance recorded were guaranteed by the U.S. government. |
TDR Loans
TDRs are modified loans where a concession was provided to a borrower experiencing financial difficulties. Loan modifications are considered TDRs when the concessions provided are not available to the borrower through either normal channels or other sources. However, not all loan modifications are TDRs.
The amount of interest that would have been recorded under the original terms for total accruing TDR loans was $41.2 million for 2012, $37.7 million for 2011, and $30.6 million for 2010. The total amount of interest recorded to interest income for these loans was $32.2 million for 2012, $28.2 million for 2011, and $23.9 million for 2010.
TDR Concession Types
The Company's standards relating to loan modifications consider, among other factors, minimum verified income requirements, cash flow analysis, and collateral valuations. Each potential loan modification is reviewed individually and the terms of the loan are modified to meet a borrower's specific circumstances at a point in time. Commercial TDRs are reviewed and approved by our SAD. The types of concessions provided to borrowers include:
-
Interest rate reduction: A reduction of the stated interest rate to a nonmarket rate for the remaining original life of the debt.
-
Amortization or maturity date change beyond what the collateral supports, including any of the following:
- Lengthens the amortization period of the amortized principal beyond market terms. This concession reduces the minimum monthly payment and increases the amount of the balloon payment at the end of the term of the loan. Principal is generally not forgiven.
- Reduces the amount of loan principal to be amortized. This concession also reduces the minimum monthly payment and increases the amount of the balloon payment at the end of the term of the loan. Principal is generally not forgiven.
- Extends the maturity date or dates of the debt beyond what the collateral supports. This concession generally applies to loans without a balloon payment at the end of the term of the loan.
-
Chapter 7 bankruptcy: A bankruptcy court's discharge of a borrower's debt is considered a concession when the borrower does not reaffirm the discharged debt.
-
Other: A concession that is not categorized as one of the concessions described above. These concessions include, but are not limited to: principal forgiveness, collateral concessions, covenant concessions, and reduction of accrued interest. Principal forgiveness may result from any TDR modification of any concession type. However, the aggregate amount of principal forgiven as a result of loans modified as TDRs during the years ended December 31, 2012 and 2011, was not significant.
TDRs by Loan Type
Following is a description of TDRs by the different loan types:
Commercial loan TDRs – Commercial accruing TDRs often result from loans receiving a concession with terms that are not considered a market transaction to Huntington. The TDR remains in accruing status as long as the customer is less than 90-days past due on payments per the restructured loan terms and no loss is expected.
Commercial nonaccrual TDRs result from either: (1) an accruing commercial TDR being placed on nonaccrual status, or (2) a workout where an existing commercial NAL is restructured and a concession was given. At times, these workouts restructure the NAL so that two or more new notes are created. The primary note is underwritten based upon our normal underwriting standards and is sized so projected cash flows are sufficient to repay contractual principal and interest. The terms on the secondary note(s) vary by situation, and may include notes that defer principal and interest payments until after the primary note is repaid. Creating two or more notes often allows the borrower to continue a project or weather a temporary economic downturn and allows Huntington to right-size a loan based upon the current expectations for a borrower's or project's performance.
Our strategy involving TDR borrowers includes working with these borrowers to allow them to refinance elsewhere, as well as allow them time to improve their financial position and remain our customer through refinancing their notes according to market terms and conditions in the future. A refinancing or modification of a loan occurs when either the loan matures according to the terms of the TDR-modified agreement or the borrower requests a change to the loan agreements. At that time, the loan is evaluated to determine if it is creditworthy. It is subjected to the normal underwriting standards and processes for other similar credit extensions, both new and existing.
In accordance with ASC 310-20-35, the refinanced note is evaluated to determine if it is considered a new loan or a continuation of the prior loan. A new loan is considered for removal of the TDR designation, whereas a continuation of the prior note requires a continuation of the TDR designation. In order for a TDR designation to be removed, the borrower must no longer be experiencing financial difficulties and the terms of the refinanced loan must not represent a concession.
Residential Mortgage loan TDRs – Residential mortgage TDRs represent loan modifications associated with traditional first-lien mortgage loans in which a concession has been provided to the borrower. The primary concessions given to residential mortgage borrowers are amortization or maturity date changes and interest rate reductions. Residential mortgages identified as TDRs involve borrowers unable to refinance their mortgages through the Company's normal mortgage origination channels or through other independent sources. Some, but not all, of the loans may be delinquent.
Automobile, Home Equity, and Other Consumer loan TDRs – The Company may make similar interest rate, term, and principal concessions as with residential mortgage loan TDRs.
TDR Impact on Credit Quality
Huntington's ALLL is largely driven by updated risk ratings assigned to commercial loans, updated borrower credit scores on consumer loans, and borrower delinquency history in both the commercial and consumer portfolios. These updated risk ratings and credit scores consider the default history of the borrower, including payment redefaults. As such, the provision for credit losses is impacted primarily by changes in borrower payment performance rather than the TDR classification. TDRs can be classified as either accrual or nonaccrual loans. Nonaccrual TDRs are included in NALs whereas accruing TDRs are excluded from NALs as it is probable that all contractual principal and interest due under the restructured terms will be collected.
Our TDRs may include multiple concessions and the disclosure classifications are presented based on the primary concession provided to the borrower. The majority of our concessions for the C&I and CRE portfolios are the extension of the maturity date coupled with an increase in the interest rate. In these instances, the primary concession is the maturity date extension.
TDR concessions may also result in the reduction of the ALLL within the C&I and CRE portfolios. This reduction is derived from payments and the resulting application of the reserve calculation within the ALLL. The transaction reserve for non-TDR C&I and CRE loans is calculated based upon several estimated probability factors, such as PD and LGD, both of which were previously discussed above. Upon the occurrence of a TDR in our C&I and CRE portfolios, the reserve is measured based on discounted expected cash flows or collateral value, less selling costs, of the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a lower ALLL amount because (1) the discounted expected cash flows or collateral value, less selling costs, indicate a lower estimated loss, (2) if the modification includes a rate increase, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, exceeds the carrying value of the loan, or (3) payments may occur as part of the modification. The ALLL for C&I and CRE loans may increase as a result of the modification, as the discounted cash flow analysis may indicate additional reserves are required.
TDR concessions on consumer loans may increase the ALLL. The concessions made to these borrowers often include interest rate reductions, and therefore, the TDR ALLL calculation results in a greater ALLL compared with the non-TDR calculation as the reserve is measured based on the estimation of the discounted expected cash flows or collateral value, less selling costs, on the modified loan in accordance with ASC 310-10. The resulting TDR ALLL calculation often results in a higher ALLL amount because (1) the discounted expected cash flows or collateral value, less selling costs, indicate a higher estimated loss or, (2) due to the rate decrease, the discounting of the cash flows on the modified loan, using the pre-modification interest rate, indicates a reduction in the expected cash flows or collateral value, less selling costs. In certain instances, the ALLL may decrease as a result of payments made in connection with the modification.
Commercial loan TDRs – In instances where the bank substantiates that it will collect its outstanding balance in full, the note is considered for return to accrual status upon the borrower sustaining sufficient cash flows for a six-month period of time. This six-month period could extend before or after the restructure date. If a charge-off was taken as part of the restructuring, any interest or principal payments received on that note are applied to first reduce the bank's outstanding book balance and then to recoveries of charged-off principal, unpaid interest, and/or fee expenses.
Residential Mortgage, Automobile, Home Equity, and Other Consumer loan TDRs – Modified loans identified as TDRs are aggregated into pools for analysis. Cash flows and weighted average interest rates are used to calculate impairment at the pooled-loan level. Once the loans are aggregated into the pool, they continue to be classified as TDRs until contractually repaid or charged-off.
Residential mortgage loans not guaranteed by a U.S. government agency such as the FHA, VA, and the USDA, including TDR loans, are reported as accrual or nonaccrual based upon delinquency status. Nonaccrual TDRs are those that are greater than 150-days contractually past due. Loans guaranteed by U.S. government organizations continue to accrue interest upon delinquency.
The following table presents by class and by the reason for the modification the number of contracts, post-modification outstanding balance, and the financial effects of the modification for the years ended December 31, 2012 and 2011:
|
|
New Troubled Debt Restructurings During The Year Ended(1)
|
|
|
December 31, 2012 |
|
December 31, 2011
|
|
|
|
Post-modification |
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
|
Post-modification |
|
(dollar amounts in thousands)
|
Number of |
Ending |
Financial effects
|
|
Number of |
Outstanding |
Financial effects
|
|
Contracts |
Balance |
of modification(2)
|
|
Contracts |
Balance |
of modification(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&I - Owner occupied:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate reduction
|
28 |
$ |
10,501 |
$ |
145
|
|
40 |
$ |
19,152 |
$ |
(531)
|
|
Amortization or maturity date change
|
95 |
|
23,337 |
|
660
|
|
60 |
|
22,378 |
|
(1,838)
|
|
Other
|
16 |
|
4,923 |
|
1,089
|
|
7 |
|
3,373 |
|
231
|
Total C&I - Owner occupied
|
139 |
$ |
38,761 |
$ |
1,894
|
|
107 |
$ |
44,903 |
$ |
(2,138)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C&I - Other commercial and industrial:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate reduction
|
27 |
$ |
7,436 |
$ |
(2)
|
|
28 |
$ |
22,519 |
$ |
(74)
|
|
Amortization or maturity date change
|
141 |
|
76,814 |
|
(3,037)
|
|
73 |
|
27,822 |
|
(176)
|
|
Other
|
32 |
|
37,202 |
|
1,265
|
|
31 |
|
56,184 |
|
(3,131)
|
Total C&I - Other commercial and industrial
|
200 |
$ |
121,452 |
$ |
(1,774)
|
|
132 |
$ |
106,525 |
$ |
(3,381)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - Retail properties:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate reduction
|
9 |
$ |
6,883 |
$ |
957
|
|
9 |
$ |
47,473 |
$ |
4,242
|
|
Amortization or maturity date change
|
15 |
|
4,472 |
|
(25)
|
|
20 |
|
31,521 |
|
6,112
|
|
Other
|
3 |
|
1,680 |
|
(1)
|
|
7 |
|
15,672 |
|
1,267
|
Total CRE - Retail properties
|
27 |
$ |
13,035 |
$ |
931
|
|
36 |
$ |
94,666 |
$ |
11,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRE - Multi family:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate reduction
|
11 |
$ |
1,288 |
$ |
(27)
|
|
13 |
$ |
6,601 |
$ |
(208)
|
|
Amortization or maturity date change
|
32 |
|
3,554 |
|
(1)
|
|
10 |
|
2,744 |
|
22
|
|
Other
|
7 |
|
| |